Warren Buffett and John Bogle are two longtime stock market veterans who endorse a sex-less, long-term view of the market.
Buffett says he buys companies that he’d like to own even if the stock market were shut down for a few years. Bogle doesn’t want anyone thinking they can beat the market with their stock picks, so he favours low-cost indexing.
So it’s no surprise, really, that the two of them (along with some members of non-finance corporate America, like Lou Gerstner) have endorsed calls to regulate and limit short-term speculation, due to worries about systemic risk. They will outline their beliefs in a letter to be released today by the Aspen Institute
Oh, and according to the WSJ, they want the playing field tilted back in their favour:
To encourage investors to take the long view, the statement suggests that the government could change the tax-code to reward long-term holders over short-term holders — by, for example, setting capital gains tax rates that get gradually lower the longer an investor hangs on to a companies shares. Additionally, fund managers should act in the long-term interests of the investors whose money they manage — something that, the statement argues, fiduciary duty stipulates they do. Finally, activist investors who take large stakes in a company should be required to disclose when they have entered into derivative contracts to hedge away risk.
These elder statemen need to be respected and listened to. But let’s remember that they talk their book too.